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GLD, GDX, QQQ & SPY Outlook

Support levels to watch on GLD: 121.25, 120.25, uptrend line/wedge pattern. Likely target if GLD breaks below 120.25 & wedge would be the 115.70 area. Still awaiting a break below this steep bearish rising wedge pattern for a likely correction down to the 21.20 area in GDX.


Any bounce in QQQ is likely to be contained at the 106.80 resistance level with a possible (but unlikely IMO) move up to the 108.50ish resistance. Any move above that level would bring the intermediate & longer-term bearish case into question. Orange scenario (a continued move down to at least the 103.35 area) is my preferred scenario with the light blue scenario (bounce to 106.80 area) at somewhat distant alternative scenario. Regarding the SPY, a continued moved down to the 201.25ish area (orange) is my primary with my alternative scenario (light blue) allowing for a pop up to the 207 area before a continued move lower.

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May 9, 2016 9:17am|Categories: Equity Market Analysis, Gold & Commodities|Tags: , , , , , , , |7 Comments

7 Comments

  1. dan123 May 9, 2016 9:53 am at 9:53 am

    Thank you Randy for the update

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  2. pangblood May 9, 2016 10:19 am at 10:19 am

    Randy, will you be looking to add to your NUGT short? Or will you wait for closing minutes to confirm a wedge break before adding?

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    • rsotc May 9, 2016 11:04 am at 11:04 am

      I was contemplating adding to my NUGT short & still might but will probably just sit tight with my current position as it’s usually better to have an under-weighted position than an normal or over-weighted position when playing a counter-trend trade on the miners.
      As far as the wedge breakdown, here are my thoughts: GDX already managed a very slight break below the wedge last week but not enough to say it was anything more than a tag of the bottom of the wedge. However, based on where prices are now in relation to the apex of the wedge plus the fact we just tested it a few trading sessions ago & are already testing it again (GDX is actually slightly below the wedge or right on an alternative uptrend line I have off the Jan lows), my guess is that it will break down from here without another bounce back inside the pattern.
      IMO, one could short GDX or NUGT right here with a stop above 24.75 GDX for an objective entry with an attractive R/R of about 0.85 downside for a possible gain potential of about 2.80 (3.3:1 R/R). Still a counter-trend/aggressive trade so certainly not for everyone.

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      • pangblood May 9, 2016 11:28 am at 11:28 am

        well said, I’ll take the trade. This may be getting ahead a bit too much but do you see the possibility for a even larger scale correction for gold? And miners? Maybe GDX to 19.1 level? Or do you think there are very low chances of this happening (due to long term bullish technicals)? Thanks

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        • rsotc May 9, 2016 12:12 pm at 12:12 pm

          Yes, I do see the possibility for a much deeper correction the miners. In fact, my max. downside pullback target would be about the 17.70 level on GDX, representing a correction of about 31% off the recent highs. That level corresponds with both horizontal price support as well as a 61.8% retracement of the run off the Jan lows. FWIW, that horizontal support shows better on a long-term monthly chart(20+ year) of the $HUI gold bugs index (150.57ish level + 61.8% Fib retracement). Can’t say that I’m targeting that level, at least not just yet but very much open to the possibility, depending on how the charts develop going forward.

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      • Ruben May 9, 2016 2:56 pm at 2:56 pm

        Randy,
        Dollar plays a major roll in GOLD correction. Do you see $ going higher and to what levels?
        Thank you

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        • rsotc May 9, 2016 3:54 pm at 3:54 pm

          @robenruben I agree 100%. I’ve been making a consistent case for a near-term rally in the dollar despite the high level of bearish sentiment & fact the dollar was in a strong downtrend when I started making the case for a bounce (some of my recent commentary on the dollar can be found here: http://rightsideofthechart.com/tag/uup/ ) At this time, I’m looking for a bounce up to at least the 24.65-24.75 level on UUP while I’ll continue to assess & modify my bounce target(s) as the charts develop in the coming days/weeks.

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